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Minneapolis FED President Neel Kashkari stated that although he believes that interest rates will remain stable for a long time, the institution may consider an interest rate increase if necessary.
Speaking at the Milken conference, Kashkari expressed concerns about the latest inflation data, questioning whether current monetary policy was restrictive enough to return price growth to the central bank's 2% target. He shared these views in an article published on the institution's website.
“The most likely scenario is that we are here for a long time,” Kashkari said. He added that if inflation starts to fall or there is a significant weakening in the labor market, the central bank may consider lowering interest rates.
However, Kashkari did not rule out the possibility of an interest rate increase. “If we are convinced that inflation has settled at 3% and we need to raise interest rates further, we will do so if necessary,” Kashkari said. He emphasized that this is not the most likely scenario and that the bar for an interest rate increase is quite high.
In addition to his comments on potential rate adjustments, Kashkari also announced that he raised his long-term neutral interest rate forecast to 2.5% from 2%. Minneapolis FED President, who will not vote on monetary policy this year, said it is important to determine policy based on where the neutral rate is in the short term.
In related news, NY Fed President John Williams has suggested that interest rates will be cut eventually, while Citadel founder Ken Griffin predicts that the Fed will cut rates this year, potentially by December.
*This is not investment advice.